Alternatives are energy sources other than conventional oil and natural gas which can be used instead in one or more applications, including; as a prime energy source to generate electricity, as a transportation fuel, for space heating, as an ingredient in plastics, pesticides, pharmaceuticals, semiconductors, and fertilizers, and as a lubricant in industrial machinery and manufacturing. Alternatives include ethanol, tar sands, oil shale, coal liquefaction, gasification, renewables and nuclear energy (fission or fusion).

Renewed interest is being shown by the oil industry since the beginning of the 21st century in Albertan tar (bitumen) sands, the subject of $100 billion of investment through 2010. Before about 1980, this resource was not cost effective to produce. Due to advancing technology and higher prices for crude oil, since about 2000 it has become economically feasable to use tar sands to produce low-quality, heavy-grade crude oil. The figure for estimated reserves of Albertan tar sands is increasing due to advancing technology and investment and is currently (mid 2006) around 180 billion barrels (cf. the Saudi Arabian reserve of about 260 billion barrels of conventional oil). Many analysts believe that the abundance of these low-grade forms energy might consign peak oil theory to the history books; others disagree citing that many experts doubt that labor and cost-intensive oil production from tar sands can exceed even 4MB/day by 2020. Furthermore, large inputs of costly natural gas and fresh water are required to separate the tar (bitumen) from the sands.

Syngas, created via coal liquefaction, requires no engine modifications for use in standard automobiles. As a byproduct of oil embargos during Apartheid in South Africa, Sasol, using the Fischer-Tropsch process, developed relatively low-cost coal-based fuel. Currently, over 50% of fuel (mostly diesel) used by automobiles in South Africa is produced from coal. With crude-oil prices currently around $70 per barrel, this process is now cost-effective.

Depending on when global oil production peaks, these alternatives may not yet be commercially available or scalable to replace conventional oil. To gain time to develop these alternatives, promoting conservation and improved efficiency are seen as the easiest courses of action to deal with rising prices of scarce oil and natural gas.

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